THE federal government has all but rejected a debt guarantee for Qantas after the airline announced a $252 million first half loss and plans to shed 5000 jobs.

Qantas, battling record fuel costs and fierce competition from subsidised rivals, is working to slash costs by $2 billion over three years.

The first-half loss, coupled with an $111 million profit for the same period a year earlier. sent Qantas shares down more than 7 per cent.

The cuts triggered a feisty debate in federal parliament, as Labor said it might support a debt guarantee but ruled out backing changes to legislation to allow the airline to lift its foreign ownership above 49 per cent.

Noting it was a difficult day for Qantas workers, Prime Minister Tony Abbott was cool on a debt guarantee, telling parliament the airline was not a special case.

``Why should the government do for one what it is not prepared to do for all, or what is not necessarily available for all?’’ he said.

Virgin Australia boss John Borghetti said if the government gave Qantas a debt guarantee, he would seek a similar pledge “within 24 hours’’.

SEE HOW THE STORY UNFOLDED ACROSS AUSTRALIA TODAY

Mr Abbott strongly argued for enabling Qantas to secure more foreign capital and take the fight up to its competitors.

“We want to ensure that Qantas is not competing against its rivals with a ball and chain around its leg,’’ he said.

Opposition Leader Bill Shorten said there was no excuse for the government not to step in.

“This is the worst day for aviation people since the collapse of Ansett,’’ he said.

Opposition transport spokesman Anthony Albanese said changing the Qantas Sale Act was a distraction for government inaction. He said if foreign investment were an issue, the airline would already be at its 49 per cent foreign ownership limit and not the current 39 per cent.

Changing the act would have other ramifications, including thousands of jobs going offshore, rural and regional routes being dropped and the likely split of Qantas’ operations into separate domestic and international companies.

Independent senator Nick Xenophon has called for a judicial inquiry into the company’s financial mismanagement, particularly in relation to Jetstar, and called for Mr Joyce and the Qantas board to be sacked.

”The jobs that should have been lost are Alan Joyce and his board,’’ he said.

Mr Joyce said he was committed to Qantas and the board was 100 per cent behind the plan to turn the business around.

“We have a plan to cover every aspect of the business to get it back to profitability and we have the courage and commitment of the management team to make that happen,” he said.

“Difficult and anxious day” ... Prime Minister Tony Abbott responds to the first question on Qantas during Question Time in the House of Representatives.Source: News Corp Australia

Qantas Frequent Flyer members reassured

5.09pm: Qantas Loyalty CEO Lesley Grant emailed Frequent Flyer members to reassure them that Qantas Points balance will not be affected in anyway.

“Qantas is changing, but what will never change is our commitment to rewarding you for your loyalty, whether on the ground, or in the air,” said Ms Grant.

He claimed the government is determined to ensure that the company gets an “appropriate level playing field”, but admitted “what we do for one business, in fairness, we have to make available to all businesses”.

Despite the Mr Abbott’s vow against playing politics on Qantas, Deputy Prime Minister Warren Truss blamed the carbon and mining taxes partly for the carrier’s woes.

Mr Truss dismissed an accusation by Mr Shorten that the federal government always blamed workers.

He said the carrier had a future but aviation was changing.

Many of the jobs of the past will not be required in the future, Mr Truss said.

”It is simply beyond dispute that Qantas is faced with the difficulty of having to compete with airlines in countries where the wage structure is very different from what it is in Australia,’’ he said.

“That’s not the fault of our workers.’’

Qantas breach union agreement

2.21pm: Electrical Trades Union national industrial officer Matthew Murphy said he was yet to hear how many of his members would lose their jobs, but said he expected the bulk of any cuts to fall on aircraft maintenance engineers in Sydney and Melbourne.

He said while job losses were of concern for the ETU, Qantas’ decision to freeze wages was also a clear breach of the union’s agreement with the airline. Mr Murphy said that the ETU might be forced to take their case to the Federal Court if Qantas didn’t reconsider.

Qantas deny staff gag

1.59pm: Qantas say they have not banned staff from talking to the media, despite reports.

Where the cuts will fall

1.55pm: Of the 5000 jobs to go, 1000 are linked to previously announced closures at the airline’s heavy maintenance facility at Avalon and their Adelaide catering facility.

Australian Licenced Aircraft Engineers Association federal secretary Steve Purvinas believes 175 of the association’s members will lose their jobs, including about 53 in Melbourne and 65 in Sydney.

The Australian Manufacturing Workers Union fears about 100 of its members will lose their jobs, with the majority to go in Brisbane but workers in Melbourne and Sydney also set to be affected.

In Adelaide, the Australian Services Union has told The Advertiser redundancies would be offered to 100 baggage handlers plus 100 other ground staff, including check-in assistants.

The bulk of the 1500 jobs to go in management and non-operational positions are expected to come from Qantas’ Mascot headquarters, while Jetstar’s Melbourne base will also feel the pain.

The location of other job cuts is expected to be made clear in the coming days.

17 jobs going with the closure of Qantas Courier, the Australian Services Union says.

What should Qantas’ future be? Take our poll or leave a comment below

Qantas - Have your say

1.15PM: Qantas management has done a demolition job on the airline but have failed to outline a strategy to grow the business and serve the national interest, the Australian and International Pilots Association says.

With the announcement this morning that 5000 are jobs set to go at the airline, 50 planes are to be retired and international routes cut, AIPA president Nathan Safe said the Australian Government should be demanding Qantas management demonstrate a coherent plan for growth in exchange for any taxpayer support.

“Qantas management has today outlined a demolition job, but failed to follow through with a strategy for how it will grow the business and serve the national interest,” Mr Safe said.

“The Federal Government should be twisting management’s arm to be open and honest about where it is heading. Otherwise, it is like supporting a plan to bulldoze half a house before the blueprints to rebuild have been drawn,” he said.

A lot of the prolems of Qantas date back to 1992 when Bob Hawke privatised the thing. Geff Dixon shld share some blame.

“We know that this Qantas management is adept at dramatic announcements, but has a patchier record when it comes to following through with a coherent long-term plan for improvement and growth. That is what the government should be demanding, not just swingeing cuts.”

The AIPA represents about 2400 domestic and international Qantas Group pilots, and is the largest pilots association in the country.

Mr Safe said it was vital that management did not attempt to whitewash over how the company arrived at this position.

“Put aside fringe issues and focus on the key reasons the company has been going backward rapidly and you will find it has been due to misguided management decisions: poor aircraft choices, distracting investment in risky offshore ventures, bad strategic choices, and terrible brand management,” Mr Safe said.

“If the Australian Government wants Qantas to turn all this around then it has to force management to confront the misguided approach taken in recent years.

“If management is allowed to simply make excuses then it cannot improve its performance.”

“So we’ve seen over the years that we’ve got a business plan that is about managing decline and not necessarily going for growth, and that’s not a sustainable model,” Mr Oliver said.

The Australian Manufacturing Workers Union said the job cuts and sell-off of terminals are a smack in the face for workers and the airline’s safety reputation.

AMWU national president Andrew Dettmer says he doubts Qantas could guarantee its safety record if jobs are sent offshore.

“Alan Joyce and the Abbott government have once again shown their true colours — they don’t care about workers, they don’t care about Australian industry and they don’t care about Qantas’ safety,” he said in a statement.

“This is a dire situation. We call on the government to stop blaming workers and their conditions and to stand up for people’s jobs and Australian icons, not simply throw them away.”

12.53PM: Reports are emerging that Qantas staff have been banned from speaking to the media, which has led to some incredulous responses on social media.

Greens: Govt should buy some of Qantas

12.50PM: The Greens have gone a step further, suggesting the government consider buying some or all of the company.

“We need to be looking at all options here,” the party’s Transport spokeswoman Lee Rhiannon told the media in Canberra.

“Those options need to also include partial or full public ownership of Qantas,” Senator Rhiannon said.

She claimed the privatisation of the airline has been a “failed experiment”.

Qantas staff left in the dark

12.40PM: Qantas engineering workers told the Herald Sun they had been told nothing about the future of their jobs and were relying on the information that had been reported in the media this morning.

Training officer Nathan Spinks, 36, said staff were frustrated they had not been told what the future held for them.

“All anyway wants to know is where they stand,” said Mr Spinks, who has worked at Qantas for 19 years.

“Everyone is on tenterhooks ... We have no idea, we only know what we’ve heard in the media.”

He said he was passionate about working at Qantas but realised changes needed to be made to restructure the business “because we probably are a bit heavy”.

“Divide and conquer. Don’t tell those who are losing their jobs until they have no say.” – fpvdude, Melbourne.

For sale ... more than 50 aircraft will deferred or sold. Qantas planes at the terminal in Melbourne today. Pic. Nicole GarmstonSource: HeraldSun

“Almost no questions about holding the board to account for such a shabby management of a company. No response to Greenwood’s question on Joyce’s position on the board. No account to poor selection of new aircraft and poor excuses on financial management.” – AEROMEDIC, Melbourne.

“Embarrassing all around — AJ can’t answer a question to save himself. All the money spent in Corporate Comms is so people can write his speeches and lines to repeat over and over.” – Qantas 787, Sydney.

“Our leadership (or lack of it) is on display today — no wonder we are in trouble.” – Qantas 787, Sydney.

“Can they both use the term “going forward” a bit more?” – spelling_nazi, Melbourne

“Guys the Abbott Gov. is not to blame they have only been in office for less than a year. The blame lies in house with the management and board of QF” — SHVC, Australia

He said that he has never seen such despondency among staff as he has in the last 24 hours, adding that Qantas staff love working for the airline but “despise” management.

Mr Sheldon dismissed the value of meetings between unions and the airline scheduled tomorrow, saying Qantas management would just present the “same rubbish”.

‘Age of entitlement is alive for corporate Australia’

12PM: Slashing jobs to win taxpayer assistance shows the ‘age of entitlement’ is alive and well for corporate Australia, the Electrical Trades Union says.

The union, which represents hundreds of Qantas maintenance workers around the country, said while government assistance for major industries isn’t new, any taxpayer money for the airline would mark the first time a company has been rewarded for slashing thousands of Australian jobs.

“Contrary to the claims of the Abbott Government that the ‘age of entitlement is over, we’re seeing multi-billion dollar taxpayer support rewarding the largest private sector employer in the country for slashing Australian jobs and cutting wages,” ETU national industrial officer Matthew Murphy said.

“Worse still, it has been made extremely clear to the company that receiving a taxpayer-funded debt guarantee from the Federal Government is tied to their efforts to cut wages and conditions — which includes an attempt to modify current workplace agreements to cancel previously-agreed pay rises.”

He called on the Prime Minister to “back up” the debt guarantee measure the government has recently been “hinting” at.

Shadow Transport Minister Anthony Albanese talked up Qantas’ role of being the national carrier.

He reiterated the view that Labor was willing to look at possible changes to the Qantas Sale Act, but would not agree to any move reducing the total cap on foreign ownership.

“We support majority Australian owned,” Mr Albanese said.

Mr Shorten said today is the worst day for aviation people since the collapse of Ansett.

He cited other governments around the world that invested in their airlines.

“We’d be the bunnies if we waved goodbye to an Australian icon,” the Labor leader warned.

He also predicted how the government would blame the company’s predicament on the carbon tax, workers and the Opposition.

“They’ll be like pets returning to their dinner,” he said.

‘The problem is Alan Joyce’

11.26AM: Independent Senator Nick Xenophon says that there should be a judicial inquiry into Qantas’ financial woes, and has pointed the finger squarely at chief executive Alan Joyce and the airline’s board.

Rather than repealing the Qantas Sale Act, which Mr Joyce said has handicapped the airline and prevented it from accessing foreign investment, Mr Xenophon said senior management’s failed strategy has been to blame.

“It is in the national interest for Qantas to remain as our national flag carrier, to remain in Australian hands,” he said.

“The Qantas Sale Act is not the problem,” Mr Xenophon said.

“The problem is Alan Joyce, the board and a failed Qantas strategy.”

“Until you change the management that I find completely inept, then we need to patently say that the Qantas Sale Act is not the problem.”

“If the Qantas Sale Act is the problem, then let’s look at it. But I suggest to you it’s not, and that’s why an independent inquiry with judicial powers needs to look at the books of Qantas.”

Earlier this week, Mr Xenophon posted the tweet below about the then looming Qantas cuts:

#Qantas needs to open its books to the Govt to reveal if it&#39;s the Qantas Sale Act or lousy management and strategy to blame for crisis.

11AM: Asked how he believes the company’s employees will take the cuts announced this morning, Qantas chief executive Alan Joyce said he thinks there is a recognition among staff that Qantas has significant challenges and that changes need to be made.

He said that changes are also targeted at ensuring customers continue to have the best possible experience, with more modern planes and upgrades to plane interiors and airport lounges.

The fleet will be the youngest in about two decades.

“We must, and we are, making the hard but necessary decision that will protect this great company and ensure its return … to a profitable future,’’ he said.

“We have to make the tough decisions and hard choices.

“We will be a far leaner Qantas group, and it should be clearly understood we took these actions irrespective of actions the government will make.”

Mr Joyce said he will be meeting with unions tomorrow to go through the details of the job losses.

Lighter side ... cartoonist Warren’s take on the Qantas changes.Source: DailyTelegraph

Where will the cuts come from?

10.53AM: Of the planned job cuts, Qantas says 1500 will come from management and non-operational roles.

The remainder will come as a result of changes to the fleet and network, the restructure of maintenance operations and the restructure of catering facilities.

Joyce: Results are unacceptable

10.50AM: The carrier’s underlying $252 million loss was at the bottom end of the $250 million to $300 million range flagged in December. But it was still a sharp deterioration from the $192 million full-year underlying profit it recorded for the 2012/13 financial year.

Mr Joyce said the result was unacceptable.

“We must take actions that are unprecedented in scope and depth to strengthen the core of the Qantas Group business,” he said.

Irvine: Are the cuts enough?

10.45AM: The cuts to Qantas are radical but will they be enough to ensure the Flying Kangaroo’s future?

News Corp Australia national economics editor Jessica Irvine thinks taxpayers would do well to return to their seats and ensure their seat belts are tightly secured: there is further turbulence ahead. CLICK HERE TO READ THE FULL ARTICLE.

Joyce: I have regrets

10.38AM: Qantas chief executive Alan Joyce said he regretted the job and service cuts but they were essential to keep the airline strong in the future.

“I regret the need for these wideranging job losses, but we will do everything we can to make the process easier for employees who leave the business,” he said.

“At the end of this transformation, Qantas will remain an employer of more than 27,000 people, the vast majority based in Australia — and we will be a better and more competitive company.”

“Australia has been hit by a giant wave of international airline capacity, with a 46 per cent increase in competitor capacity since 2009 — more than double the global increase of 21 per cent over the same period.

“The Australian domestic market has been distorted by current Australian aviation policy, which allows Virgin Australia to be majority-owned by three foreign government-backed airlines and yet retain access to Australian bilateral flying rights,” he said.

“Late last year, these three foreign-airline shareholders invested more than $300 million in Virgin Australia at a time when, as Virgin Australia reported … it was losing money. That capital injection has supported continued domestic capacity growth by Virgin Australia despite its growing losses,” he said.

“Qantas has been undertaking its biggest-ever transformation over the past four years … but this is not enough for the circumstances we face now.

“With … economic changes being exacerbated by the uneven playing field in domestic aviation, we must now take actions that are unprecedented in scope and depth.”

“Hard decisions will be necessary to overcome the challenges we face and build a stronger business.”

Who&#39;s thinking the QANTAS frequent flyer programme site will crash today with punters eager to cash in their points?

10AM: The airline has also taken the razor to its future fleet growth plans.

It will defer deliveries of eight remaining Airbus A380 aircraft and the last three of 14 787 Dreamliners it has on order from US manufacturer Boeing.

It also plans to restructure future Airbus A320 orders and suspend any future growth for its Singapore-based subsidiary, Jetstar Asia.

9.57AM: In terms of the airline’s fleet plans, it will reduce the number of wide-body aircraft in its domestic fleet, with the remaining aircraft focused on East-West routes and peak Sydney-Melbourne-Brisbane services.

It said this will free up A330 aircraft to enter Qantas’ international divisions as replacement aircraft.

Other changes include the replacement of its ageing Boeing 767 by the third quarter of the 2014-15 financial year.

Six of its oldest Boeing 747-400 aircraft will also be retired by the second half of 2015-16.

It is also going to retime its Melbourne-London services to reduce the amount of time its A380 aircraft sit on the tarmac at Heathrow.

9.48AM: Qantas also plans to restructure its maintenance operations, on top of the already announced closure of Victoria’s Avalon maintenance base.

It will also restructure its catering operations, including the previously announced closure of the Adelaide catering centre.

9.40AM: As part of its network and fleet reorganisation, the airline will exit underperforming routes and make aircraft changes on certain routes to better match capacity and demand.

This includes cutting Perth-Singapore flights and operating Sydney-Singapore and Brisbane-Singapore with smaller Airbus A330-300 aircraft. Aside from cutting some routes and putting smaller aircraft on others, Qantas said it will work existing planes harder and reduce the number of aircraft types in its fleet from 11 to seven by 2015-16.

The airline will recoup $112 million from the Brisbane Airport Corporation in return for the sale.

Qantas holds a 31 year lease on the northern end of the airport’s domestic terminal, which is due to expire on December 30, 2018.

Under the new arrangements, the airline will retain exclusive use and operational control over much of the terminal’s northern end until 2018, while securing rights to key infrastructure beyond this period.

“Brisbane Airport is one of the most important airports for Qantas today and increasingly so into the future,” chief executive Alan Joyce said.

“This investment is vital to the ongoing growth of aviation in Queensland which helps drive tourism and boost the economy.”

The arrangement also covers Qantas’ use of the runway system at Brisbane Airport, including current infrastructure and the new parallel runway, which is currently under construction.

The airline is believed to be negotiating a similar deal at Melbourne Airport.

“They’ve had plenty of time to talk this through with Qantas and the other industry players to get the advice and to reach a conclusion and the day to deal with it is now,” Mr Bowen told reporters in Canberra.

Qantas in crisis
1:52

“If the government wants to make proposals, whether it be debt guarantee or other proposals, we’d look at them,” he said.

Before the announcement, Labor Senator Doug Cameron called on Alan Joyce to resign.

“He is not the man for the job,” he told reporters as he arrived at Parliament House.

Greens MP Adam Bandt wants any assistance to come with assurances local jobs will be protected.

“Qantas and Alan Joyce are a flight risk,” Mr Bandt said.

“There is a very real concern that if the taxpayer steps in to support Qantas that unless it comes with strings attached to protect local jobs Alan Joyce and Qantas are going to take that support and the money and the jobs are going to be on the next 747 out of here.”

He said the Sale Act should not be amended.

The government is drafting changes to the Act, which has been in place for more than 20 years.

But Deputy Prime Minister Warren Truss, who has portfolio responsibilities for aviation, says the future of Qantas is in the hands of the company.

He backed the tough measures the company was proposing to address its financial position.

Qantas would have to be better managed with a more productive workforce than any of its competitors to remain strong.

The government has offered Qantas the prospect of a debt guarantee that would allow the airline to borrow more cheaply and help it regain its investment-grade credit rating.

It is also drafting legislation that would allow an increase in the foreign ownership of Qantas, by removing limits imposed by the Qantas Sale Act, which caps the company’s foreign ownership at 49 per cent.

Determined ... Qantas chief executive Alan Joyce has been pushing for changes to the Sales Act to allow more foreign investment.Source: News Limited

The laws also require the airline to keep most of its maintenance, catering, flight operations and training facilities for its international services in Australia.

Prime Minister Tony Abbott yesterday said Qantas will not have to guarantee a certain number of jobs in Australia in exchange for the relaxed foreign ownership laws.

“What Qantas does is a matter for Qantas management,” he said, adding that it was not the business of government to run airlines.

However, the changes have previously drawn opposition from Labor and The Greens, while many MPs within the Coalition have expressed their own concerns.

Opposition transport spokesman Anthony Albanese said it was important Qantas remained an Australian-based company and urged the Federal Government to take concrete action to support the airline, rather than release “thought bubbles”.

Qantas’ main rival, Virgin Australia, is also vehementally opposed to any support for the carrier, branding it “unfair”.

Airline founder Sir Richard Branson earlier this month took the unusual step of posting an open letter in newspapers, arguing that propping up Qantas would prompt global businesses to think twice about investing in Australia.

Regional airline Rex has also spoken out against a debt guarantee to Qantas, and warned regional aviation was on the verge of collapse.

Comments on this story

Martin M. Paul of Kingston Posted at 2:00 PM February 27, 2014

So when can Australia now expect the resurrection of Work Choices ?

Pat Ignazio of Hobart Posted at 1:39 PM February 27, 2014

Why is it only after Ford announced it's decision to shut down that all the others started to follow suit ? Holden, Mitsubishi, Toyota, Alcoa ... others needing assistance Cadburys, Ardmona but to name just a few. Just like dominoes falling. What were all the bean counters doing through all of this...sleeping ?

Jane Hamilton of hobart Posted at 1:32 PM February 27, 2014

Gotta love life under the Liberals - if you're a millionaire you're laughing !